In a significant development, the Chairman of Hero MotoCorp, Pawan Munjal, faced raids at his residence by the Enforcement Directorate (ED) as part of an ongoing investigation into alleged money laundering activities. The raids were conducted at properties located in Delhi and Gurugram, under the provisions of the Prevention of Money Laundering Act (PMLA). It is worth noting that this is not the first time Pawan Munjal has come under scrutiny, as he was previously subjected to raids by the Income Tax Department on allegations of tax evasion.
The latest ED raid on Tuesday targeted Pawan Munjal’s residence to investigate suspected money laundering activities. The investigation was initiated based on a complaint from the Directorate of Revenue Intelligence (DRI), focusing on an individual reportedly associated with the Hero MotoCorp Chairman. This person was previously under investigation for carrying undeclared foreign currency.
Following the ED raid, Hero MotoCorp’s shares experienced a significant decline in Tuesday’s trade, with the stock plunging 5.34% and reaching a low of ₹3,032.10 on the Bombay Stock Exchange (BSE). Despite this recent setback, the company’s scrip still shows a year-to-date gain of 13%.
Previous Raids and Allegations
Pawan Munjal, the Chairman of Hero MotoCorp, has faced regulatory scrutiny before. In March 2022, the Income Tax Department conducted searches at various offices of Hero MotoCorp, including Pawan Munjal’s residence, on allegations of tax evasion.
During the investigation, the Income Tax Department uncovered disturbing findings, including more than Rs 1,000 crore in bogus expenses, significant unaccounted cash expenditures, and violations related to the purchase of a farmhouse in Delhi. The department claimed that Rs 100 crore from Pawan Munjal’s alleged black money stash was used to pay for the farmhouse, which is a violation of the Income Tax Act’s Section 269 SS.
Hero MotoCorp, the world’s largest two-wheeler manufacturer, has vehemently denied all allegations. In an official statement, the company clarified that the Income Tax Department conducted routine inquiries at two of their offices in Delhi and Gurugram, as well as at Pawan Munjal’s residence. Hero MotoCorp emphasized that such inquiries are not unusual before the financial year-end and that the company adheres to the highest standards of corporate governance, operating ethically and within the bounds of the law.
Despite the recent raids and ongoing investigations affecting Hero MotoCorp’s share price, which experienced a more than 7% intraday decline, the company remains committed to its business operations. Hero MotoCorp is actively working on introducing new electric vehicles in the Indian market and has announced a partnership with Taiwanese two-wheeler maker Gogoro to develop electric vehicles and incorporate Gogoro’s swappable battery solutions, addressing the issue of charging infrastructure in India.
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